With Sterling Gaining Against Most Major Currency Pairs What is Driving These Gains?

By Charles Kurth

15th May, 2012

Over the last 12 months we have seen on average a 15% gain against the Indian Rupee, Hungarian Forint, Polish Zloty, South Afrifcan Rand, Czech Krona and Mexican Peso. With retail sales waining at the prospect of two of the wettest months on record (apart from a 5000% reported increase in umbrella sales!) and the UK falling back into the double-dip many are asking what is driving these gains on Pound-Sterling exchange rates.

On the face of it we should be in in a time of downturn. PMI data for the Services Sector fell below par for April, the effects of the double-dip are becoming more evident and with political instabillity driving headlines global investors could skip the EU chapter.

There are however plenty of positives to be focusing on. With the olympic torch lit and en route from Greece retail sales in the UK will see an increase as the opening ceremony and the preprations moves closer. The UK trade deficit also narrowed in March to £2.7bn with an increase in demand from the US, China and Russia which bodes well for the coming months.

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